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I have seen a recent uplift in organisations within my sector – Construction, Infrastructure and Support Services enquiring about restructuring professionals from CRO level through to HR change mangers.
Could it be that the companies are realising that the signs of an economic upturn may not surface in 2009 and are looking to reduce their cost base through restructuring, to benefit from the savings that would be created in this financial year? I can understand the need for dramatic cost savings within the construction sector; however, I personally did not expect our Facilities Management clients to start speaking of restructuring just yet. The message from FM in 2008 was “working capital is an issue although trading is in line with expectations”. It has now moved to “we are considering a major restructuring exercise” so where has this change of mind set come from?
Ultimately every listed organisation trading in a recession must still demonstrate share holder value and have a “good story to tell”, maybe now is a good time to restructure and show the investors that the current management board can add value just as effectively in a downturn as what they have proven to do in a growth market. Maybe the only good news that is to come out of 2009 is an increased profit percentage against the previous year realised by reducing costs and restructuring.
I would be interested in your thoughts on this matter. What do you believe will be the best route forward for businesses in this sector? Should they attempt financial restructuring when the banks look less inclined to lend? Should they consider restructuring and reorganising of their business when selling on assets or non-core divisions may not reap the same windfalls of eighteen months ago? Do they hold on and wait for signs of recovery? Let’s hope that the Construction and Support Services sector is galvanised into action which should be good news to many in the interim community. I look forward to hearing your views. Mark Kitchen is Head of the Construction, Infrastructure and Support Services Practice at Interim Partners.
March 10th, 2009 at 9:03 am
My view is that to “hold on for signs of recovery” is akin to being a rabbit in the headlights. No one knows how long this challenging environment will last so to guess at it instead of reacting to the environment around us strategically flawed. I think there has been a wide spread paralysis of inaction as decision makers have been taken, quite understandably, by surprise by the depth and spread of the current crisis. Now though the time is for action. Decisions need to be made, sensible survival strategies agreed and then implemented. I’ve no doubt that there is even scope for some companies to turn the current crisis to their financial and strategic advantage, but it’s unlikely to be by sitting back and doing nothing.